More and more divorces today are ending in settlement instead of litigation. Settling a divorce helps both parties save money, and can mean that the case ends much faster than it would have if the parties had decided to take the case all the way through trial. Here are some common mistakes that you should be careful to avoid in working through your settlement.
First is accepting a settlement offer without reviewing it meticulously. Even if you and your spouse have come to a verbal agreement, make sure that whatever document he or she provides you to sign is an accurate representation of what you thought the agreement should be. Once you and your spouse have both signed the settlement papers, it can be very difficult to set aside, and telling a judge that you failed to read what you were signing is not going to be a good enough reason.
Second is not giving adequate consideration to the long-term financial impact of the settlement. Divorce settlements can have a big effect on your taxes both now and in the future. You need to give careful consideration to these tax implications, which could involve the ramifications of improperly dividing a retirement account, deducting spousal support from your taxes, or capital gains tax from selling a piece of real estate. It is worth consulting a financial planner or your CPA before accepting any settlement agreement.
Third is digging in your heels on whether you are willing to divide certain items of personal property. Items such as electronics, furniture, or decorating pieces may have become fixtures of your every day life, but they are also easily replaced. Ultimately, it may be cheaper to let your spouse take the couch that you love so much and simply replace it after the divorce. Letting a divorce settlement fall apart over easily replaced personal property can cost you a large amount in attorneys’ fees.
Last is not knowing or understanding the true value of assets before accepting a settlement offer. It can be a big mistake to simply take your spouse’s word about the value of the marital residence or what is contained in investment accounts. It is important to make sure that you have a firm grasp of the value of the marital estate and have reviewed supporting documentation before you sign any agreement.
Setting aside a settlement, or judgment, is an incredibly difficult task. It is imperative you get it right the first time. We have helped many clients craft specialized settlement agreements and avoid common pitfalls. Contact us today at 619-800-0384 so we can talk about settlement options in your case.